DCP MIDSTREAM PARTNERS, LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2011, 2010 and 2009 — (Continued)
We had net long-term deferred tax liabilities of $1.8 million and $1.6 million as of December 31, 2011 and
2010, respectively, included in other long-term liabilities on the consolidated balance sheets. These state
deferred tax liabilities relate to our East Texas operations, and are primarily associated with depreciation related
to property plant and equipment.
Our effective tax rate differs from statutory rates, primarily due to being structured as a limited
partnership, which is a pass-through entity for United States income tax purposes, while being treated as a
taxable entity in certain states.
16. Net Income or Loss per Limited Partner Unit
Our net income or loss is allocated to the general partner and the limited partners, including the holders of
the subordinated units, through the date of subordinated conversion, in accordance with their respective
ownership percentages, after allocating Available Cash generated during the period in accordance with our
partnership agreement.
Securities that meet the definition of a participating security are required to be considered for inclusion in
the computation of basic earnings per unit using the two-class method. Under the two-class method, earnings
per unit is calculated as if all of the earnings for the period were distributed under the terms of the partnership
agreement, regardless of whether the general partner has discretion over the amount of distributions to be made
in any particular period, whether those earnings would actually be distributed during a particular period from an
economic or practical perspective, or whether the general partner has other legal or contractual limitations on its
ability to pay distributions that would prevent it from distributing all of the earnings for a particular period.
These required disclosures do not impact our overall net income or loss or other financial results; however,
in periods in which aggregate net income exceeds our Available Cash it will have the impact of reducing net
income per LPU.
Basic and diluted net income or loss per LPU is calculated by dividing limited partners’ interest in net
income or loss, by the weighted-average number of outstanding LPUs during the period. Diluted net income per
limited partner unit is computed based on the weighted average number of units plus the effect of dilutive
potential units outstanding during the period using the two-class method. Dilutive potential units include
outstanding performance units, phantom units and restricted units. The dilutive effect of unit-based awards was
64,286 equivalent units during the year ended December 31, 2011. There were no dilutive unit-based awards
during the year ended December 31, 2010.
17. Commitments and Contingent Liabilities
Litigation
Prospect
— During the fourth quarter of 2011, we received a claim for arbitration (the “Claim”) filed with
the American Arbitration Association by Prospect Street Energy, LLC and Prospect Street Ventures I, LLC
(together, the “Claimants”) against EE Group, LLC (“EE Group”) and a number of other parties that previously
owned, directly or indirectly, our Marysville NGL storage facility (collectively, the “Respondents”). EE Group
is our indirect subsidiary which we acquired in connection with our acquisition of Marysville Hydrocarbons
Holdings, LLC (“MHH”) on December 30, 2010 (the “Acquisition”). The Claim involves actions taken and
time periods prior to our ownership of EE Group and MHH, and includes several causes of action including
claims of civil conspiracy, breach of fiduciary duty and fraud. We acquired a 90% interest in MHH from Dart
Energy Corporation (“Dart”), a 5% interest in MHH from Prospect Street Energy, LLC and a 100% interest in
EE Group, which owned the remaining 5% interest in MHH. The Claim seeks, from the Respondents
collectively, alleged actual, punitive and treble damages and disgorgement of profits, as well as fees and
costs. The purchase agreements for the Acquisition contain indemnification and other provisions that may
provide some protection to us for any breach of the representations, warranties and covenants made by the
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